HOUSE OF REPRESENTATIVES

H.R. NO.

158

TWENTY-THIRD LEGISLATURE, 2006

 

STATE OF HAWAII

 
   


HOUSE RESOLUTION

 

requesting the auditor to audit the hawaii employers' mutual insurance company.

 

 

WHEREAS, providing adequate monetary compensation, medical care, and vocational rehabilitation for injured workers at affordable premium costs to employers remains a worthy and desired goal for the citizenry of the State of Hawaii; and

WHEREAS, Article 14A of the Insurance Code, Chapter 431, Hawaii Revised Statutes, was enacted in 1996 with the stated purpose of establishing the Hawaii Employers' Mutual Insurance Company "to provide workers' compensation coverage to employers of the State at the highest level of service with the lowest possible cost, consistent with reasonable and applicable actuarial standards and the sound financial integrity of the company" and "to provide the highest standard of workplace safety and loss prevention, to encourage employer involvement, and to be responsive to each policyholder's experience, practice, and operating effectiveness"; and

WHEREAS, from January 1, 1977, through December 31, 2007, the Hawaii Employers' Mutual Insurance Company has been excluded from the surplus requirements of domestic mutual insurers and assessments by the Hawaii Hurricane Relief Fund for the first $25,000,000 of written premiums in each calendar year; and

WHEREAS, the Hawaii Employers' Mutual Insurance Company was tasked to work with policyholders, health care providers, and employees to develop, implement, and monitor workplace safety and health and return to work programs, including the development of workplace accident and injury reduction plans and to promote safety programs for policyholders through analyzing reports of industrial accidents of members, conducting studies of risk and hazard identification and assessment by safety and medical professionals, and conducting educational programs to prevent frequently recurring industrial accidents; and

WHEREAS, assigned risk coverage as authorized in section 431:14-116, Hawaii Revised Statutes, was discontinued on December 31, 1996, with the expectation that the Hawaii Employers' Mutual Insurance Company would provide insurance coverage for such risks and would assist Hawaii employers entitled to workers' compensation coverage but who were unable to purchase such coverage in the voluntary insurance market or through self-insurance; and

WHEREAS, section 431:14A-109.5, Hawaii Revised Statutes, establishes an oversight council for the Hawaii Employers' Mutual Insurance Company whose responsibilities include receiving financial data, triannual examination reports by the Insurance Division, and actuarial certification of loss reserves so that they may make determinations of whether the company is fulfilling the purposes set forth by law in Article 14A of the Insurance Code and whether deficiencies exist in this regard; and

WHEREAS, the Hawaii Employers' Mutual Insurance Company is required to compile and maintain statistical and actuarial data relating to its determination of premium rates, incidence of work injuries, cost of injuries and other data relating to work injuries for annual submission to the Insurance Commissioner; and

WHEREAS, the Hawaii Employers' Mutual Insurance Company is empowered to conduct annual accountings of its incurred loss experience and expenses and to declare dividends to policyholders, according to classifications set policies established by its board, having due regard for the solvency of the company; and

WHEREAS, for all the foregoing reasons, the Legislature believes that an audit of the Hawaii Employers' Mutual Insurance Company is necessary to assess that organization's fiscal performance and management to insure it fulfills the statutory purposes for which it was created; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2006, that the Auditor is requested to conduct an audit and an impact assessment report on the Hawaii Employers' Mutual Insurance Company; and

BE IT FURTHER RESOLVED that this body requests that the audit and impact assessment address:

(1) Whether the Hawaii Employers' Mutual Insurance Company has fulfilled the statutory objectives for which it was created providing the highest possible quality of workers' compensation insurance at the lowest possible cost;

(2) Whether it has effectively implemented workplace safety and loss prevention programs for its shareholders;

(3) Whether it has prudently managed its finances and justified the special treatment it has received in exemptions from surplus requirements for domestic insurers and exclusion from assessment of the Hawaii hurricane reserve trust fund;

(4) Whether it has met existing needs for marginal insureds to provide reasonable cost insurance as was intended when the assigned risk pool was abolished;

(5) Whether the Hawaii Employers' Mutual Insurance Company has established fair and reasonably inclusive standards for such insureds who have been unable to obtain insurance in the voluntary insurance market;

(6) To what extent the need for workers' compensation insurance of insureds from the former assigned risk pool are being adequately met;

(7) Whether the Hawaii Employers' Mutual Insurance Company's standards and practice for servicing the injured employees of its insured are consistent with community practice of private insurance carriers and government entities in terms of prompt adjudication and payment of compensable claims;

(8) Whether the Hawaii Employers' Mutual Insurance Company's has fairly and reasonably allocated its profits between executive compensation, internal personnel costs, dividends to shareholders, and payments to injured workers it insures; and

(9) Whether the Hawaii Employers' Mutual Insurance Company's reserve is on track to be fully funded; and

BE IT FURTHER RESOLVED that the Auditor is requested to submit findings and recommendations to the Legislature, including any necessary implementing legislation, not later than twenty days prior to the convening of the Regular Session of 2007; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Auditor and to the Insurance Commissioner, who in turn is requested to transmit copies to the Hawaii Employers' Mutual Insurance Company.

 

 

 

OFFERED BY:

_____________________________

Report Title:

Auditor; HEMIC